The next two questions refer to the following. Suppose the yen-pound exchange rate is currently 1 = 300.

The next two questions refer to the following.

Suppose the yen-pound exchange rate is currently £1 = ¥300. A Japanese bank borrows £2 million from UK lenders for 1 year at 6% interest, and lends ¥600 million to Japanese borrowers for 1 year at 8% interest.